Knives out in ASL boardroom saga

company’s board.
ASL had put a requisition to oust chairman Mr Tendai Chimuriwo and two other directors Mr David Cooper and Mr Mike Manyika.
The three directors are said to be driving the agenda to cancel the 50-year leases for the eight properties being leased to ASL.
Mr George Manyere, Mr Ambrose Matika, Mr Felix Muzvondiwa and Mr Bekhithemba Nkomo, who is also chairman of ASL, will replace the three.
The new board would be tasked with resuscitating the original vision for Dawn and ensure that there is stability.
ASL and Dawn have been fighting over the past two years after Dawn issued summons to ASL to cancel the leases citing rental breaches dating back to 2009, which ASL denies in its plea submission.
However, sources within ASL say the principal reason for firing the three board members is that the managers were driving the company in divergence to the original intention of the establishment of Dawn.
ASL listed Dawn in 2003 with the original vision to unlock shareholder value by allowing the property entity to participate in the property sector which would not have been possible had the hotel properties remained under the operating entity.
Dawn was then expected to leverage on the massive balance sheet to go into retail, residential and commercial properties, as well as development.
ASL strongly believes that the legal case is a clear indication that the board has materially diverged from the vision of setting up the property firm.
It is understood that 63 percent of Dawn’s shareholding is held either directly by ASL or by shareholders of ASL.
Besides the issue of rentals and yields to Dawn, ASL is said to be unhappy with the recent financials released by Dawn.
Dawn results indicated that almost 50 percent of its US$2,4 million was spent on administration costs which were described as unacceptable by ASL.
They say the below expectation performance of Dawn’s subsidiaries cannot be condoned and that they are taking too long to exit their loss-making subsidiaries, CB Richard Ellis and Dawn Produce.
Prediction of the EGM
Naturally, I don’t think ASL would have called for an EGM without calculating their chances of winning the game.
An analysis of Dawn’s share register shows that ASL will have the majority votes to remove the three directors.
ASL and its allies control about 42 percent while the other camp controls about 23 percent of the company.
Old Mutual’s vote will also play a significant role as they control about 11 percent of the shares in issue.
ASL, which directly controls 29 percent of Dawn, is also seeking to increase its shareholding in the property firm to control the company at shareholder level.
If ASL wins the game naturally they would reverse the eviction bid and probably delist the property entity to merge with the hotel group.
Even if they remain listed this would also mean that future decisions at Dawn would be influenced by ASL to a greater extent.
If they win back control of Dawn, definitely the business model would be changed to ensure that the business returns to profitability by diversifying into other property portfolios.
On the other hand, ASL seems to have hedged its bets by increasing its shareholding in Dawn — the group is also looking for substantial parcels in Dawn to increase its stake to about 35 percent.
At this point African Sun can only buy into Dawn up to a maximum of 35 percent hereafter they have to offer minorities.
However, this would require some financial restructuring.
African Sun says by controlling Dawn they would ensure that there would not be a situation where the hotel assets will be taken away from the operating company, hence defeating the reason for unbundling.